by David Bodamer December 30th, 2008
General Growth Properties Inc., a publicly traded real estate investment trust that owns more than 200 shopping malls in the U.S., signed forbearance agreements temporarily protecting the company against defaults.
The senior credit lenders agreed to take no action until Jan. 30 in return for General Growth’s consent to allowing no change in control or sale of assets without their consent. General Growth also will not incur debt or buy subordinated debt without the lenders’ consent.
The holders of $900 million in matured mortgages agreed to waive non-payment until Feb. 12.
Link.
Past links and stories:
- December 19, GGP Puts Centers on the Block
- December 18, General Growth Extension Comes Through
- December 15, GGP “Continuing its Discussions with Lenders”
- December 15, Breaking: GGP Refinances
- December 5, Citi Plays Hardball With GGP
- December 3, Centro, GGP Find Ways to Hang On
- December 1, GGP Gets Two Week Extension
- November 25, Ackman Builds Stake in GGP
- November 20, General Growth Hires Bankruptcy Advisor
- November 17, General Growth Downgraded; Feldman to Stop Filing Public Reports
- November 12, General Growth Roundup
- November 11, General Growth Warns of Default
- November 5, GGP, Kimco Fall After Cutting Forecasts
- November 2, General Growth “Almost Literally Worth Nothing”
- October 17, Management Changes at GGP
- October 15, Margin Calls Hit Two More Retail REITs
- October 7, General Growth Near Bankruptcy?
- October 3, General Growth CFO Steps Down; Company Suspends Dividend
- October 2, GGP Under Fire for Inclusion on Short-Sell Ban List
- October 1, Could General Growth Be Sold?
- September 23, Short Selling Banned on General Growth
- September 22, General Growth Strikes Back
- September 16, General Growth Offers More Recourse
- August 12, Another Look at GGP’s Debt
- August 6, Analysis of GGP’s Debt
- July 25, Stories With Bigger Implications?
- July 14, GGP Lines Up New Financing
- April 16, GGP’s Growing Debt Problem
Related Topics: Finance, News, REITs, Retail Real Estate |
by David Bodamer December 30th, 2008
This from the Boston Herald–analyst Burt Flickinger says that up to 3,000 retail properties could close in March and April. That sounds like a massive, massive number. We haven’t heard anyone else make that kind of projection. We haven’t heard about many actual mall closings at all to date. There’s certainly a lot of properties hurting. But could that projection possibly be right?
The current spate of retailer bankruptcies and those expected in the new year – along with still-healthy companies limiting or stopping their expansions – could have a ripple effect on the commercial real estate market.
Burt P. Flickinger, managing director of New York consulting firm Strategic Resource Group, expects 2,000 to 3,000 U.S. malls and shopping centers to close in March and April.
…
Normally, the large banks and financing companies would have adequate funds to “backstop” the REITs and other retail center owners. But so many retailers and property owners are either “retracting or collapsing” at the same time that there’s insufficient credit to save every one, according to Flickinger.
“It’s a natural falling out,” he said.
Related Topics: News, REITs, Research, Retail Real Estate |
by David Bodamer December 30th, 2008
“The leverage is what’s going to kill them,” said Bret Wilkerson, chief executive of Property & Portfolio Research.
That means that some malls will be grappling with less income while facing oppressive debt costs.
“You’ve got pressure from both sides here,” Calanog said.
Reis forecasts that the fourth-quarter mall vacancy rate could top 7 percent, the highest since Reis began tracking regional mall performance in the start of 2000.
It sees fourth-quarter mall rents falling by 0.1 to 0.4 percent.
All retail properties, not just large malls, may see their rents fall by an average of 3.5 percent in 2008 and 5.5 percent in 2009, according to Property & Portfolio Research.
The research firm tracks “economic vacancy,” or the amount of retail space that surpasses the amount that sales can support.
Economic vacancy now stands at about 13.5 percent and is expected to peak at 17.3 percent in the third quarter of 2009, “implying that one out of every six square feet needs to just go away,” Wilkerson said.
Link.
Related Topics: Finance, News, REITs, Retail Real Estate |
The Push for the Bailout Continues
by David Bodamer December 30th, 2008
Grubb & Ellis president David Arena took the case for the commercial real estate bailout to the airwaves and appeared on Fox Business to discuss the particulars. The industry doesn’t seem to want to use the word bailout. That makes sense. It’s become a loaded word. Instead, Arena uses the word “backstop.” On one hand, what groups are asking for isn’t that complicated. The groups are simply asking for inclusion in an existing program. On the other hand, I think the general public is going to have a hard time accepting the notion that the commercial real estate industry needs help from the government. It will be fascinating to see how this continues to play out.
(Spotted at Square Feet Commercial Real Estate Blog.)
Previous bailout posts:
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